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A VoIP phone utilizes internet technology rather than traditional landlines to make phone calls, operating on a cloud-based phone system. There are two types of phones that work on this system: hard phones and soft phones. Hard phones are physical devices that connect to the internet via an ethernet cable, resembling traditional desk phones. On the other hand, soft phones are software-based applications that can be downloaded to laptops, tablets, or smartphones, allowing users to make and receive calls on these devices.